Reason Foundation

Federal Education Funds Should Enable School Choice and Follow the Child

School funding portability is a trend that has been occurring in school districts across the nation. It allows money to flow to schools on a per-pupil basis, rather than by teaching positions and prescriptive student-teacher ratios. Recently, school funding portability has reached the federal stage. Two bills, S.1968 and H.R. 5 give states the option to let Title I dollars (the largest federal education funding program at more than $14 billion) follow students to the schools of their choice. This would solve existing inefficiencies within Title I while expanding opportunities to disadvantaged students.

The federally funded Title I program provides financial assistance to high-poverty school districts, the goal being to improve academic achievement. Federal Title I dollars flow to state education agencies (SEAs) based on each of their local education agencies (LEAs) share of low-income students. LEAs, or school districts, then distribute the money to schools, in rank order, based on their share of low-income students. Under the current system there is no guarantee that each low-income student receives the extra funding.

If a school does receive Title I funds, safeguards intended to protect against the misuse of funds direct school administrators to spend Title I in limited ways. In practice, these safeguards largely hinder the effectiveness of the program.

The program’s supplement-not-supplant clause essentially is a fiscal test. It ensures that Title I funds are not spent on things that are, or have been provided for using state or local funds. For instance, if a school used local funds for a tutoring program but had to end it due to budget cuts, the school could not then re-open the program using Title I funds. That is, unless they want to run the risk of having their Title I funding privileges revoked.

Spending restrictions under supplement-not-supplant impede school leaders from developing innovative Title I programs, and increase administrative burdens. In schools with a smaller concentration of low-income students, it is especially challenging to offer effective services with Title I.

Schools whose low-income students make up less than 40 percent of the student body can only spend Title I on eligible students. To comply, administrators often use “pull-out” methods separating Title I students from their peers. This makes it problematic to offer comprehensive programs.

The rules and regulations under Title I make it difficult to achieve the program’s goals. It is almost impossible to justify expenditures without violating a spending restriction. However, if Title I gave states the option to make available funds portable it would solve many of these challenges. Two existing legislative proposals, if passed, accomplish this.

House majority leader Eric Cantor’s amendment to the Student Success Act (H.R. 5) gives parents the option to take Title I dollars to the school of their choice. Senator Lamar Alexander’s Scholarships for Kids Act (S. 1968) gives states the opportunity to make a “Scholarships for Kids” program. Each state’s program awards Title I funds to eligible children on a per-pupil basis in the form of grants. Families can use the grant money to send their child to the private or public school of their choice.

If either bill passes, it will allow states and school districts already using school funding portability models to add Title I dollars to their funding formulas. Whereas, under current law there is no option of how Title I funds are distributed. SEAs must distribute Title I based on school or district share of low-income students, restricting local autonomy.

Awarding Title I funds on a per-pupil basis would garner greater budgetary transparency. At the same time, the choice component would empower parents to choose the school that is the best fit for their child. This creates an incentive for schools to attract and retain students, and the funding attached to them. Under these bills, local accountability replaces federal spending restrictions such as those under supplement-not-supplant.

Policymakers can ensure that Title I funds are best serving the disadvantaged students that the program was created for. However, the existing federally mandated restrictions on expenditures and strict guidelines for distribution have proven shortcomings that limit the program’s effectiveness. States and school districts should be given the opportunity to award Title I funds on a per-pupil basis, where money follows eligible students to the school of their choice, and school leaders are given the flexibility they need to make sure funds are spent most effectively.